Archive for the ‘Green growth’ Category

Energy reality meets Climate Reality

In its enthusiasm to spread the word about the rapid uptake of renewable sources of energy, the Climate Reality Project recently circulated the picture below. It references the amount of wind energy, in particular, that is now being generated in the German State of Schleswig-Holstein.

Climate Reality Renewable Energy

This is Germany’s northernmost state and borders both the North Sea and the Baltic, so benefits from the windy climate that this geography offers. It is well known as Germany’s windiest area

Schleswig-Holstein

In recent years and as part of the overall push to generate more renewable energy in Germany, considerable wind energy capacity has been installed in this region. While the current level of generation from wind is laudable, this is far from 100% renewable energy. The actual milestone that the state has reached was more accurately described as follows;

The Northern German coastal State of Schleswig-Holstein will be able to mathematically meet its electricity demand fully with renewable energy sources this year if wind yields reach at least average levels, Robert Habeck, Minister of Energy said when presenting a new study last week (May 2014).

This means that the amount of wind (and solar) electricity generated in Schleswig-Holstein will be equal to total demand, but these may not match in terms of timing. At certain times the state will export surplus wind generated electricity into the grid and at other times it will need to draw from the grid to meet its needs, particularly during periods of little wind. Nevertheless, it is quite an achievement, even though it highlights the need for a substantial backup system for renewable electricity generation.

But there is a second major reality associated with “100% renewable energy” statements. We live in a global economy that is only partly powered by electricity, to the extent that even if this electricity is generated entirely from renewable sources, the percentage of renewable energy in the final energy mix will still be less than 20% (see below). Even in OECD countries where electricity is more widely used, this only rises by a few percentage points.

Global final energy 2011

The largest slice of final energy (i.e. energy that is used by the final consumer for the delivery of an energy service, e.g. mobility) is oil, used mainly for mobility in road vehicles, planes, trains and ships. Natural gas and coal are also very large, used primarily for industrial processes such as steel making, chemical plants and similar. Natural gas is also used extensively throughout the world as a residential fuel for boilers and direct home heating.

Coming back to Schleswig-Holstein, the actual percentage of renewable energy in the final mix is probably higher than most areas, not just because of its renewable electricity production but also because of the availability of biomass from the agricultural sector. In Germany as a whole, even if all the electricity was sourced from renewable energy (but it isn’t) and adding to this the biofuel and waste energy sources, a level of ~27% renewable energy would be reached. For Schleswig-Holstein with its current level of renewable generation, that probably translates to ~30% today.

That’s an impressive feat, but it isn’t 100%.

The hairdryer conundrum

Last week the UK media put a lot of effort into reporting on the EU ban on the sale of the most powerful vacuum cleaners and then extended the discussion to possible future action on other high end appliances that consume a lot of energy, such as powerful hair dryers, kettles, toasters and so on. This was also in a week when there was an extraordinary amount of other news to report on as well, ranging from ISIS to celebrity photo leaks, so it wasn’t as if they were short of content. Yet kettles seemingly won the day.

Daily Exress Kettles

Some media outlets were just outraged at the broader idea of Brussels interfering yet again, but others began a discussion about the effectiveness of the measure, with The Guardian resorting to the headline “Will banning high-powered kettles and hairdryers help climate change efforts?”.

The intention behind the legislation stems from the EU Energy Efficiency Directive, which in turn is part of the 20/20/20 for 2020 package – i.e. 20% reduction in GHGs, 20% renewable energy and 20% improvement in energy efficiency. The package aims to meet a number of energy related policy objectives, but the big three are climate, competitiveness and security of supply.

The Telegraph also reported on the issue and was able to quote EU Energy Commissioner, Günther Oettinger, who said that legislation preventing consumers from buying high-wattage appliances was necessary to fight climate change. To quote;

“We haven’t got round to these devices yet, we want curb power consumption,” he told Bild newspaper. “All EU countries agree that energy efficiency is the most effective method to reduce energy consumption and dependence on imports and to improve the climate. Therefore there needs to be mandatory consumption limits for small electrical appliances.”

Unfortunately it isn’t quite this simple. While using energy more efficiently may well improve EU competitiveness and, provided there is no domestic efficiency driven rebound, might even lower the dependence on imports, the impact on “climate change” will likely be zero. This is because of the “stock” nature of the carbon dioxide problem in the atmosphere and the scale of energy demand globally. Nevertheless, there is the notion expressed by many, that as efficiency effectively drives down local energy use (e.g. in a household or factory), mandating efficiency must be part of the policy mix to reduce global carbon dioxide emissions. Efficiency is a vital part part of economic growth, but it’s relationship to carbon dioxide emissions is much more complex.

I have written about this many times before and perhaps the explanation that I keep returning to as to why people accept the above notion is an examination of the Kaya Identity, which although correct in its presentation of carbon dioxide emissions in the economy leads to a flawed conclusion as to what to do about them. The International Energy Agency (IEA) followed this line of thinking in their 2013 report, Redrawing the Energy-Climate Map. Like many others, they projected what business-as-usual emissions would be by 2020 and then argued that a focus on energy efficiency could reduce this, effectively claiming an emissions reduction. Nevertheless emissions continue to rise.  This reasoning appears to show energy efficiency as the most important contributing factor to change, yet in reality the original projection represents a situation that may never have occurred.  The economy requires improvements in energy efficiency to drive growth, which is why efficiency is so important, but that doesn’t mean emissions reduce in the sense that the eventual load on the atmosphere is impacted. If energy efficiency really is a route to a lower concentration of carbon dioxide in the atmosphere, then it needs to pass one clear test, i.e. which known fossil fuel resource will be left in the ground (or a proposed extraction project shelved) because of this? Only then are cumulative emissions potentially impacted, which is the real driver of the climate issue.

One unintended consequence of energy efficiency policy can be to exacerbate the emissions problem. In the worst case scenario, an energy efficiency improvement in the power generation supply chain can incentivize the resource holder (e.g. coal mine) to expand the resource base and therefore increase the potential tonnes of carbon that will be released into the atmosphere.

Efficiency mandates have had both positive and negative consequences over time.

  • In many instances they have spurred innovation, leading to the introduction of new products and also reducing the cost of energy services. Air conditioning is a good example, with innovation spurred by programs such as Japan’s Top Runner approach. But this has also made air conditioning much more affordable and therefore more widely available, which in turn has resulted in enormous demand for airconditioners, more settlement and development in hot arid areas and therefore more energy use. This efficiency drive has offered huge benefits to society, but one of them has not been to help manage the accumulation of carbon dioxide in the atmosphere.
  • In the USA, the introduction of tough CAFE standards for vehicles in the 1970s and 1980s was partly blamed for the rise of the SUV or light truck. As these were not covered by the standard, they offered a loophole for both the manufacturers and their customers to have larger vehicles without having to invest heavily in new technology to make them more efficient.

The vacuum cleaner mandate is already having a perverse effect. There is a rush to the shops to buy a powerful machine before they vanish, which rather undermines the whole effort . . . . . .

A very different pathway forward

During a future energy workshop that I attended recently the audience heard from Professor Jorgen Randers, from the Center for Climate Strategy at the Norwegian Business School. Although Professor Randers has been involved in scenario planning for many years, he introduced his lecture by saying that it was time to just do a realistic forecast of what is “going to happen” and be done with it. He held out little hope for any sort of coordinated global action on emissions, which basically meant that the world would just have to come to terms with its higher atmospheric CO2 future. What was interesting though was the forecast that he then proceeded to give – it certainly wasn’t the runaway apocalypse that some will have us believe we are in for. I should say that Professor Randers earnestly thought we need to do better than this, he just couldn’t see how it might come about.

The forecast he presented is available on his website (www.2052.info). He uses a very small number of key metrics to establish his outlook, but takes a different view on how they might develop. The starting point is population, which he sees reaching a plateau of 8 billion in 2040, at the low end of UN forecasts (but not outside the forecast) . This is because of declining fertility rates as women increasingly move into the workforce and seek careers. As the existing population ages the global death rate increases as well. This population trend is, not surprisingly, a critical assumption for his forecast.

Randers - population 

The next key assumption is that global GDP will begin to slow down, linked in part to the population assumption (the number of people in the 15-65 age bracket actually falls after 2035) and a second critical assumption that continuous improvement in labour productivity will eventually end as this metric plateaus (he noted that it has already started to). The result is global GDP also reaching a plateau in the 2050s and beyond. Linked to this is a plateau in consumption which is dampened by the need to spend a non-trivial amount of global GDP on adaptation and reconstruction (coastal cities etc.) as the climate changes and sea levels continue to rise. This latter point is an important self regulating part of the analysis.

Randers then turned his attention to energy use, shown in the chart below. With energy use per unit of GDP (efficiency) continuing its downward trend, global energy use peaks in 2040 and then declines.

Randers - energy 

The energy mix also changes over the period, with renewable energy coming on strongly, oil use reaching a long plateau around 2020 then declining quite quickly and both coal and natural gas use peaking in the 2030s. As a result CO2 emissions peak in 2030 and decline, dropping 10 billion tpa over the subsequent 20 years.

Randers - CO2 

All of this then feeds through to an eventual plateau in atmospheric CO2 and therefore temperature. Randers clearly recognizes that we shoot through 2°C, but the end point in his forecast is about 3°C, not the much higher levels of 4, 5 or even 6°C that some are concerned about. In effect, this is now a self regulating system, albeit one that has to deal with significant changes in sea level and other impacts.

There was no attempt to endorse any of this, quite the opposite. Randers also noted that some of his assumptions are seen as politically or socially unacceptable, such as the declining birthrate and an eventual plateau in GDP. As such, the forecast itself becomes something of a political hot potato.

Whether he is right or wrong isn’t really the point, what is interesting about the analysis is that some very small changes in basic assumptions can have a profound effect on the outcome. Pretty much anybody that has constructed even the simplest spreadsheet with built in growth rates recognizes this, but I hadn’t seen it applied in this manner before. Even though they may be outside our normal expectation, all of his assumptions fall within the bounds of credibility, so the forecast is essentially a valid one. A 3°C world is far from where we are today, but it is useful to recognize that our global climate / economic system is now essentially a single entity and that there may be an outcome which is very different to the alternate vision of “meltdown”.

There are many books and thousands of reports on climate change, carbon economics, energy transformation and the like, but few encapsulate the issue as well as a recently released book by Mike Berners-Lee and Duncan Clark, The Burning Question. Judging by the recommendation on the cover, even Al Gore liked it.

bqcover

Rather than speculate on the potential severity of climate events or try to convince readers that simple changes in consumer behaviour and green, job creating investment will solve everything, the book takes a thought provoking but dispassionate look at the global energy system. The authors discuss the role of fossil fuels and the carbon emission limits that we know we should meet and set out to explain the rock and the hard place that we find ourselves between. The rock in this case is the trillion tonne of carbon limit for cumulative emissions over time and the hard place is the abundance of fossil fuels, the rate at which we use them and the relative ease with which more becomes available as demand rises.

Berners-Lee and Clark present a compelling set of stories which show how fossil fuels dominate the global energy market, why it is proving almost impossible to displace them (on a global basis) and why strategies such as improving energy efficiency and deploying renewables  are not effective approaches to try and limit global emissions. In fact they make the point that in some instances the reverse happens – emissions just rise faster.

The tag line on the cover includes the teaser  “So how do we quit?” (using fossil fuels). Do they really know? As the book unfolds and the problem they describe mounts in both complexity and difficulty, there is almost the feeling of a thrilling ending around the corner. SPOILER ALERT. Sadly this is not quite the case, but they do give some useful advice for policy makers trying to get to grips with the issue and the book itself gives the reader a very different perspective on the energy-climate conundrum (although hopefully one that the readers of this blog have picked up over time, but here it is all in one book).

I assume that for similar reasons to my own line of thinking (but after beating around the bush about it for 181 pages) they do finally land on a key thought:

In the course of writing this book we have come to think that the most undervalued technology in terms of unlocking international progress on climate change is carbon capture – both traditional CCS for point sources such as power plants and more futuristic ambient air capture technologies for taking carbon directly out of the atmosphere.

It would appear that The Inconvenient Truth and CCS are indeed inextricably linked. Clark and Berners-Lee don’t go so far as to argue that CCS is the convenient answer, but the message on CCS is a strong one. Nevertheless, geoengineering makes a surprise entrance at the end!!

Overall, this is an excellent discussion which is both easy to ready and hugely informative. It is well worth putting it on the summer reading list.

The Easter break provided a good opportunity to catch up on some recent climate stories, but the current messages delivered by the various media and other outlets vary enormously with a bewildering array of assertions and counter claims.

The continued arguments about the “pause” or otherwise in global warming continue, most notably in the Mail Online / Mail on Sunday, where columnist David Rose argues that there is “hard proof” that incorrect global warming forecasts are “costing us billions”. But his arguments have a number of problems.

The Mail chose to quote a number of climate scientists, one of whom almost immediately refuted the way in which the article had used his quote. Myles Allen, Professor of Geosystem Science in the School of Geography and the Environment, University of Oxford and Head of the Climate Dynamics Group in the University’s Department of Physics is reported to have said;

“. . . . that until recently he believed the world might be on course for a catastrophic temperature rise of more than five degrees this century. But he now says: ‘The odds have come down,’ – adding that warming is likely to be significantly lower. Prof Allen says higher estimates are now ‘looking iffy’.”

But in an article in The Guardian, Allen made it clear that his point was very different to that expressed;

But I also explained that doubling pre-industrial carbon dioxide concentrations, which we are almost certain to do now, was just the beginning. Increasing use of fossil carbon at the current rate would drive atmospheric concentrations towards four times pre-industrial figures by 2100. So even if the “climate sensitivity” is as low as 2C, as some lines of evidence now suggest, we would still be looking at 4C plus by the early 22nd century.

The Mail article uses a simple surface temperature chart to argue that warming estimates have been a “spectacular miscalculation”, even though the heavy black line shown in the chart (see below) has not actually breached the 95% confidence limits, rather there is just the assertion that it “is about to crash out”.

 

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Further to this, the Mail has not done any real analysis of this trend, such as presented in December 2011 by Foster and Rahmstorf (Global temperature evolution 1979–2010, Grant Foster and Stefan Rahmstorf, Environmental Research Letters 6 (2011) 044022 (8pp)). In their paper they correct for the effect of volcanoes, solar variability and ENSO (El Nino Southern Oscillation) in all the main global temperature data sets and present the chart below – which shows a steady and continuing issue with the global heat balance and a consequent rising temperature trend.

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Other studies show similar findings, such as the Berkley Earth Surface Temperature Project. The Economist also weighed in and discussed the differences between climate modeling approaches and ventured some thoughts on why these models are giving quite different results at the moment.

One of the issues that the Mail article addressed was the money being spent in the UK on renewable energy and its flow through to electricity and fuel bills. There is no doubt that this is an issue at the moment in the UK, but the reasons for it are multiple and complex. Attempting to create a simple link between the need for offshore wind subsidies and recent temperature trends trivializes both the climate issue and the various discussions around energy security, competitiveness and energy costs.

The renewable energy issue leads onto another story published just before Easter – a posting by Paul Gilding in Australia which made the case that the fossil fuel industry is on the verge of massive disruption, leading to its inevitable extinction in just a few decades.

There are signs the climate movement could be on the verge of a remarkable and surprising victory. If we read the current context correctly, and if the movement can adjust its strategy to capture the opportunity presented, it could usher in the fastest and most dramatic economic transformation in history. This would include the removal of the oil, coal and gas industries from the economy in just a few decades and their replacement with new industries and, for the most part, entirely new companies. It would be the greatest transfer of wealth and power between industries and countries the world has ever seen.

Of course it’s difficult for me to pass credible comment on this, given my affiliation to that industry, but the facts simply don’t stack up. While there is no doubt that renewable energy use is accelerating rapidly, so too is the use of fossil fuels and of course our overall use of energy. Both renewable energy and fossil energy will need to grow, simply to make energy ends meet. In the recently released Shell New Lens Scenarios, the Oceans scenario sees an extraordinary increase in solar energy uptake, which by 2030 is seriously outpacing the recent and current (1990-2020) surge in coal use. But even with this growth rate, it is not until about 2030 that fossil use drops below 80% of primary energy use and not until 2060 that overall fossil use actually starts to decline in absolute terms.

Finally, Bjorn Lomborg resurfaces in The Times with his article “The joy of global warming” (subscription required to read this). He argues again as he has for many years that the issue is something for later rather than for now (“ . . . global warming is a problem for the future but a benefit now . . . .”), but does make the cogent point that the emissions issue will not resolve itself until “green” energy comprehensively outcompetes fossil energy. However, he seems to miss the point that climate is a “stock problem” due to the accumulation of CO2 in the atmosphere, so simply waiting until later may not be the right course of action at all (again, another lesson from the recent Shell scenarios).

So, as already noted, a bewildering array of messages. It is little wonder that policy makers, the public, academia and NGOs are collectively at a loss as to how to take the climate issue forward. Most readers are probably well versed on my view of what needs to be done, but if not, it’s here.

The green economy: blessing or curse?

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The above was the title of a panel debate hosted by the UK newspaper, The Daily Telegraph, late last week. There is a short write up in the Saturday edition of the newspaper. I was fortunate to participate in this, alongside Oliver Letwin MP, Minister of State (providing policy advice to the Prime Minister in the Cabinet Office) and Cabinet attendee. Other panel members were UCL Professor Paul Ekins, Jeremy Nicholson from the Energy Intensive Users Group and renewable energy venture capitalist Ben Goldsmith.

Photo Courtesy of The Daily Telegraph

Although Mr Letwin chose not to offer any opening remarks, his subsequent comments revealed some interesting thinking in the UK Government on energy and climate change. Three particular lines of discussion emerged during the debate;

  1. With the “Green Economy” often associated with wind-turbines and solar PV, there was much discussion on how the UK determines its future energy mix. Mr Letwin put forward the view that an entirely market determined outcome was not in the interests of Britain. There was the risk that such a direction could result in over dependency on a particular energy source, bringing with it issues such as reliability, future price exposure, capital cost and technology lock-in. He argued that although the market should play a major role in driving change, there was also a need for the government to ensure that the resulting energy mix was built on a variety of energy sources and technologies. These included renewables, nuclear and fossil fuels, the latter also supported by CCS. This in turn meant that there was a role for government to promote technologies in the early stages of development and that this would remain a feature of their energy policy. The government would also ensure that sufficient incentive was in place for the first stages of deployment of such technologies.
  2. Following on from (1) there was some discussion on the potential role for CCS in the UK energy system. Mr Letwin reaffirmed the need for the government to support a large scale demonstration of the technology and that the proposed government injection of £1 billion was both justified and modest given the scale of the low carbon energy option that it had the potential to deliver, particularly given the remaining fossil fuel production potential of the UK. He expressed the view that the key issue with CCS was not the need to determine its technical feasibility but rather to determine its cost feasibility. Mr Letwin’s enthusiasm for CCS extended into his closing remarks where he concluded that the UK would have one of the first large scale CCS facilities in the world and that the demonstration therein that natural gas was a viable zero-carbon fuel would be of huge benefit to the UK.
  3. Not surprisingly the subject of the UK carbon floor price emerged during the discussion. Mr Letwin linked the need for it to the points made in (1) above and defended its introduction given the current state of the EU-ETS and the very weak price signal it was now delivering. But he also made it clear that it would be better for all concerned if the ETS delivered the necessary price signal: his “fingers crossed” hand gesture when the proposed EU allowance set aside was mentioned was pretty clear body language. 

Overall, it was an interesting evening and well attended. I am not sure that we ever really answered the question, but we did at least get some useful insight into the thinking that supports the current energy policy direction of the UK.

A “Catch 22″ to be delivered from Durban?

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One of the key potential deliverables from Durban is an operational Green Climate Fund (GCF). This is one of the important components of the pledge to channel up to $100 billion per annum by 2020 to developing countries for mitigation and adaptation projects. But whether the final decision is made here or at a future UNFCCC session, the current proposals may represent an investment Catch 22 that results in little or no direct use of the fund by the private sector. At a roundtable I attended in Durban over the weekend, GCF national negotiators discussed aspects of the proposed fund with the private sector. The fund does have a means for direct private sector access, which is good news, but therein lies the Catch 22. The issue that was discussed at the roundtable was the question of incentive for the private sector to actually use this instrument.

5.3.2 Private Sector
41. The Fund will have a private sector facility that enables it to directly and indirectly finance private sector mitigation and adaptation activities at the national, regional and international levels.

There are two aspects to the fund which are important in this regard. The first which was mentioned by one of the roundtable participants was that the project must be additional. This means it is a project that wouldn’t have occurred anyway, in other words it is dependent on access to the GCF for it to happen. For climate mitigation projects this implies that the project actually requires a price on carbon emissions, such as in a project under the Clean Development Mechanism (CDM) of the Kyoto Protocol. A second issue is that, at least in the case of direct private sector access, the GCF is unlikely to operate as a grant instrument but more probably as a source of loans for the project, perhaps underwriting performance aspects such as country risk. This was also discussed at the roundtable.

The problem here is that a project in a developing country which claims additionality effectively needs a grant of the carbon price. This is how the CDM works. Although there is no “grant” in the traditional sense, the fact that the CERs are awarded / granted to the project and can be monetized in a carbon market such as the EU-ETS in effect grants money to the project, albeit after the project has commenced operation rather than before. But if a grant to the private sector is unlikely, then only non-additional projects will be put forward, which in turn aren’t eligible to use the GCF.

Wikipedia defines a Catch 22 as follows:

A logical paradox arising from a situation in which an individual needs something that can only be acquired with an action that will lead him to that very situation he is already in; therefore, the acquisition of this thing becomes logically impossible.

The paradox here comes about if I have the opportunity to pursue an emissions mitigation project in a developing country. The only approach left standing which offers any scale is the GCF (CDM is rapidly being marginalized), but as it may not function as a grant mechanism for the private sector, I can’t actually monetize the carbon emissions to underpin the project economics. If I attempt the project in a way that doesn’t need carbon price monetization then it won’t be additional, in which case it isn’t applicable under the GCF, so I am left without any course of action to take forward even though the GCF has been set up with a private sector facility for me to use. It means that a CCS project, for example, would never be done under the GCF, at least not as a pure private sector project. This isn’t the complete end of the story. A private entity may be able to work in partnership with government to access the GCF in grant form.

This may not be quite a pure Catch 22, but it’s pretty close, at least based on the conversations heard over the weekend. There is still much water to pass under the bridge before the GCF is finalized, so hopefully these early bugs will be ironed out as time passes.

Green growth or green confusion?

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I have just been at the inaugural Global Green Growth Forum (3GF) in Copenhagen. This was a high level event, opened by the Crown Prince of Denmark and the new Danish Prime Minister, then following the initial panel discussion there was an introductory keynote by United Nations Secretary General Ban Ki-Moon – in person. The venue was also around the corner from the Copenhagen Tesla dealership!! 

So the event got off to a flying start, but what then? One of the issues for me is that it wasn’t entirely clear what the conference was actually about. Green growth has become one of those new catch phrases that means many things, depending in large part on the listener. Perhaps the best articulation came in a coffee break discussion – “green growth” is the recognition of the type of growth in energy production and the provision of key goods and services that will be required over the coming decades as some three billion people move from a relatively low income status to middle class.

In fact this income shift is well underway and is placing stresses on a number of systems. Rising CO2 in the atmosphere is perhaps the early warning, but little has been done to mitigate that problem. Now there is concern about water, food, energy supply and general resource availability. Unlike the CO2 issue, there is little clarity as to what we might do about these issues. Faced with rising CO2 emissions, economists, the business community and much of civil society have been clear on the course of action to pursue – to put a price on carbon. We know how to do this, we know the timeframe within which it must be done and we have a reasonably clear notion of where it will lead (CCS, renewable energy etc.), but even this seems beyond our collective capacity to act. Instead, we are arguing about science, an otherwise solid bedrock of society.

At its root, the green growth agenda feels like a growing worry that the market structure we have created over the last two centuries isn’t sufficiently robust to take us forward and that somehow market fundamentals like supply, demand and ultimately price won’t work. It’s not exactly a surprise that we might be thinking this today, after all the financial markets have hardly done us any favours over the last two to three years. But does that mean markets in general will let us down? In the 1970s similar worries surfaced – then it was overpopulation, food supply and energy as the primary concerns. It was also a time of deep recession (1974), oil price shocks(1973) and a prevalence of floods (Australia 1974) and famine (Ethiopia 1973-74). But economies grew, the energy system adapted, amazing new technologies surfaced and food supply issues soon faded.

So back to the conference in Copenhagen and two days of leading figures talking about all things green. It was certainly interesting, but I don’t think it got very far. Leadership was identified as a key component, but there was no articulation as to where that leadership should take us. In fact, when one key panelist was answering a question on the agenda for Rio+20 he said that the agenda was currently lacking because there was no leadership. There was also a spattering of business bashing (e.g. “it is the fault of Japanese business that Japan won’t accept a second Kyoto commitment”) and even the assertion that government had sent a clear signal to business that it was serious about addressing climate change because of the agreement on the 2 °C target.

It looks like the green growth agenda is here to stay, even though we may just decide to take our chances with the market system that we have. But we shouldn’t do nothing. The CO2 issue represents a market failure, the Stern Report  made this clear in 2006. Arguably, deforestation is another. There are ways to address these failures within the existing market system, the application of a carbon price as discussed above is one. The development of REDD has the necessary ingredients to tackle deforestation.

A green growth agenda that can propose, clearly define and implement a limited number of such approaches is what we need. Hopefully the meeting in Copenhagen was a forerunner to this, rather than just a taste of more and more discussion forums.